Reimbursed Expenses for Stationery Not Includible in Assessable Value: CESTAT Quashes ₹83.92 Lakh Service Tax Demand on Chandigarh NIELIT [Read Order]
The Tribunal observed that only the amount charged for the actual service rendered can be included in the assessable value as per Section 67, and reimbursed stationery expenses fall outside this scope
![Reimbursed Expenses for Stationery Not Includible in Assessable Value: CESTAT Quashes ₹83.92 Lakh Service Tax Demand on Chandigarh NIELIT [Read Order]](https://images.taxscan.in/h-upload/2025/07/31/2071283-national-institute-of-electronics-and-information-technology.webp "Reimbursed Expenses for Stationery Not Includible in Assessable Value: CESTAT Quashes ₹83.92 Lakh Service Tax Demand on Chandigarh NIELIT [Read Order]")
The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT), in its recent ruling set aside service tax demand of ₹83,92,094 against National Institute of Electronics and Information Technology (NIELIT) and held that the reimbursed expenses for stationary supplied for printing electricity bills for the electricity authorities cannot be included in the...
The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT), in its recent ruling set aside service tax demand of ₹83,92,094 against National Institute of Electronics and Information Technology (NIELIT) and held that the reimbursed expenses for stationary supplied for printing electricity bills for the electricity authorities cannot be included in the assessable value for the purpose of levying service tax.
The appellant NIELIT, an autonomous body of the Central Government under the Ministry of Communications and IT is engaged in Data Processing Services to State Electricity Boards such as Punjab State Power Corporation, Dakshin Haryana Bijli Vitran Nigam, Uttar Haryana Bijli Vitran Nigam, and U.T. Chandigarh.
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In terms of agreements, the appellant was engaged in printing electricity bills for these authorities at agreed rates of 9% over the expenses and service tax. Stationery was either supplied by the authorities or the expenses incurred were reimbursed to the appellant.
The Revenue issued a show cause notice alleging that the expenses incurred for stationery reimbursed by the electricity authorities should be included in the assessable value of the service tax payable by the appellant, confirming a service tax of ₹83,92,094 along with interest and equal penalty under section 78 of the Finance Act.
The appellant contended that the includability of reimbursed stationery costs in the assessable value under Section 67 of the Finance Act, 1994 and Rule 5 of the Service Tax (Determination of Value) Rules is no longer res integra, having been conclusively settled by a catena of judicial precedents.
It was held in those cases that prior to amendment with effect from 14.05.15, reimbursement of expenses does not form part of the assessable value. It was also submitted that the order was vague and does not specify the sub-clause of Business Auxiliary Service under which the services rendered by the appellant fall.
The appellant further argued that the services of providing computerized energy bills to electricity distribution authorities is exempt by virtue of Notification No. 45/2010-ST dated 20.07.2010 and that extended period is not invocable as the appellant was under bona fide belief that reimbursed stationery charges are not subject to service tax.
The bench comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) found merit in the appellant’s submission and allowed the appeal by relying on the Supreme Court ruling in Intercontinental Consultants & Technocrats Pvt Ltd vs. Union of India (2013).
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The Apex Court, in Intercontinental Consultants held that “in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider ‘for such service’ and the valuation cannot be anything more or less than the consideration paid as quid pro quo for rendering such a service.”
Considering the circumstances, the Tribunal held that there was no infirmity in the non-inclusion of the value of the stationery reimbursed by the electricity authorities. Further, as the appellants were not agitating the taxability of the service, the tribunal did not go into the exigibility of the service.
Accordingly, the appeal was allowed.
The appellant was represented by Krati Singh and Monarch Mittal, while the Department was represented by Anurag Kumar and Harish Kapoor.
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